On July 20, 2022, the HHS Office of Inspector General (OIG) issued a Special Fraud Alert cautioning physicians and other health care practitioners to use “heightened scrutiny” when entering into telemedicine arrangements that have “suspect characteristics” of a fraud scheme. The Alert’s release follows significant enforcement actions by federal regulators as patients and practitioners have become more accustomed to delivery of care via telemedicine.      

Release of Special Fraud Alert Coincides With Criminal Charges in Alleged $1.2 Billion Telemedicine Fraud Scheme

As we recently reported in our Investigations Blog, on July 20, 2022, the US Department of Justice (DOJ) filed criminal charges against dozens of defendants from across the country for alleged fraud totaling more than $1.2 billion involving purported telemedicine, cardiovascular and cancer genetic testing, and durable medical equipment (DME) schemes. The charges focus primarily on laboratory owners and operators whom DOJ claims paid illegal kickbacks and bribes in exchange for patient referrals by medical professionals working with fraudulent telemedicine and digital medical technology companies.
  
On the same date as the DOJ announcement, the OIG published a Special Fraud Alert (the Alert) encouraging physicians and other health care practitioners to “exercise caution and use heightened scrutiny” when entering into arrangements with companies claiming to provide telehealth, telemedicine, or telemarketing services like those the DOJ alleges in its criminal charges (collectively referred to in the Alert as Telemedicine Companies).

What Does a Fraudulent Telemedicine Arrangement Look Like?

According to the OIG, fraudulent telemedicine arrangements “vary in design and operation, and they have involved a wide range of different individuals and types of entities, including international and domestic telemarketing call centers, staffing companies, Practitioners, marketers, brokers, and others.”
 
Yet, these arrangements often have one key element in common: the payment of kickbacks to physicians and other practitioners for ordering or prescribing medically unnecessary items and services to individuals with whom the practitioners have very little, if any, interaction. In many instances, the Telemedicine Companies solicit and recruit the purported “patients” and then sell the practitioners’ prescriptions or orders to another party, which then fraudulently bills the items and services to federal health care programs and/or other payors.
 
Examples of these “suspect” arrangements include arrangements for the provision of DME, as in a case from August 2021 in which the DOJ filed criminal charges against the owner of multiple Telemedicine Companies for allegedly orchestrating $784 million in false and fraudulent claims to Medicare. In that case, the DOJ alleged the Telemedicine Companies facilitated practitioner orders for medically unnecessary orthotic braces and medications, for which DME suppliers billed Medicare. The DME suppliers then used the revenue they received to pay kickbacks to the Telemedicine Companies and ordering practitioners through various intermediary entities. According to the DOJ, this was “one of the largest Medicare fraud schemes ever charged by the Justice Department.” (You can read more of our coverage of this case on our Investigations Blog here.) 

The “Suspect Characteristics” of a Fraudulent Telemedicine Arrangement

In the Alert, the OIG highlighted seven “suspect characteristics” related to practitioner arrangements with Telemedicine Companies, which could suggest an arrangement presents a “heightened risk of fraud and abuse”: 

1. The purported patients for whom the practitioner orders or prescribes items or services were identified or recruited by the Telemedicine Company, telemarketing company, sales agent, recruiter, call center, health fair, and/or through internet, television, or social media advertising for free or low out-of-pocket cost items or services.

2. The practitioner does not have sufficient contact with or information from the purported patient to meaningfully assess the medical necessity of the items or services ordered or prescribed.

3. The Telemedicine Company compensates the practitioner based on the volume of items or services ordered or prescribed, which may be characterized to the practitioner as compensation based on the number of purported medical records that the practitioner reviewed.

4. The Telemedicine Company furnishes items and services only to federal health care program beneficiaries and does not accept insurance from any other payor.

5. The Telemedicine Company claims to furnish items and services only to individuals who are not federal health care program beneficiaries but may, in fact, bill federal health care programs.

6. The Telemedicine Company furnishes only one product or a single class of products (e.g., DME, genetic testing, diabetic supplies, or various prescription creams), potentially restricting a practitioner’s treating options to a predetermined course of treatment.

7. The Telemedicine Company does not expect the ordering practitioner (or another practitioner) to follow up with purported patients, nor does it provide ordering practitioners with the information required to follow up with purported patients (e.g., the Telemedicine Company does not require practitioners to discuss the results of genetic testing they ordered with each purported patient).

If one or more of these factors is present in an arrangement with a Telemedicine Company, the parties to the arrangement could face liability under the Anti-Kickback Statute (AKS) and other fraud and abuse laws. The AKS prohibits knowingly and willfully exchanging anything of value for referrals for items or services reimbursable by Medicare, Medicaid, and other federal health care programs. Participation in a kickback transaction may result in felony criminal prosecution by the DOJ and imposition of penalties by the OIG, including civil monetary penalties and exclusion from federal health care programs. A kickback arrangement may also constitute grounds for the DOJ or a private whistleblower to file a civil lawsuit under the federal False Claims Act, under which claims to federal health care programs for items or services tied to a kickback scheme are deemed “false” or “fraudulent.”

Primary Takeaways 

Because the OIG’s special fraud alerts are relatively rare, their release is usually a strong indicator of what the OIG considers an enforcement priority. With this latest Alert, the OIG’s primary apparent goal is to inform physicians and other health care practitioners of red flags to look out for as telemedicine arrangements become increasingly common. At the same time, however, the OIG warns practitioners that they may be personally liable for a violation of the AKS and other fraud and abuse laws to the extent they participate in a fraudulent arrangement with a Telemedicine Company. As the OIG, DOJ, and other federal agencies continue aggressive enforcement measures to combat fraudulent telemedicine schemes, practitioners should heed the OIG’s warning and ensure careful review of their telemedicine arrangements, paying particular attention to any suspect characteristics the OIG outlined.